Nifty ended at fresh record closing high for the fourth consecutive session but formed a bearish candle which resembles a Hanging Man kind of pattern on the daily chart.
Nifty continued the formation of higher highs from the last fifteen trading sessions.
A Hanging Man is a bearish reversal candlestick pattern that is usually formed at the end of an uptrend or at the top. In a perfect 'Hanging Man' pattern, there will be a small upper shadow or no upper shadow at all, a small body, and a long lower shadow.
Nifty started off the day on a strong note at 14639 and hit an intraday all-time high of 14653, but erased all gains in late morning deals and hit a day's low of 14435. Nifty recouped losses in late trade to close flat at 14564.
Nifty recovered smartly from the day's low to close flat but failed to regain opening gains. The contraction in factory output for November and concerns over the upcoming Union Budget weighed on the sentiment.
Markets will react to the IT majors, Infosys and Wipro, results in early trade of Thursday. With markets at a record high, we feel the prudent approach is to use dips to add quality names. And, we expect stock-specific volatility to remain high on account of earnings announcement so participants should prefer hedged positions instead of outrights. Amid all, vaccine development in India and globally would be actively tracked for cues.
Right now the risk sentiments are stuck in the race of covid-cases and vaccine rollout. In the end vaccine will win but until then the fear of lockdown is hanging over the head. Locally, there are a lot of IPOs lined up this year, so overall downside in USDINR spot will retain. But the magnitude of fall depends on which level is comfortable for RBI.
Nifty registered a Hanging Man kind of formation as it smartly recoiled from the intra day lows of 14435 level, after almost testing preceding session’s low of 14432. However, this kind of indecisive formation is accompanied by a negative advance-decline ratio which remained strongly in favour of bears, hence can be a harbinger of weakness and volatility in near future.
Considering strong momentum and liquidity flows, if bulls manage to push the index beyond 14653 level then the upswing can get extended up to 14750/14800 level.
Though there are no sell signals as of now, considering today's volatility, it looks prudent on the part of Traders to remain cautious and take a neutral stance on the index and if someone is holding on to long positions in Nifty, then put a stop loss below 14400.
Among sectors, except pharma other indices ended in the green. Midcap and Smallcap ended lower by 0.6 percent and 0.4 percent respectively.